Understanding the Difference Between Growth and Income Assets

Growth and income from your assets are the two things that will create your financial freedom.

Whilst you want both of these, they are very different and serve completely different purposes in creating your financial freedom AND in feeding off your feast.

This video explain the difference between the two, how your asset types generate both and why you’d choose one over the other at different stages in your wealth generation.

From this video I hope you can see why it is so important to understand when you are wanting Capital Growth or Income from your assets and why, knowing that income is not always your friend as it attracts the tax man.

What you want from your assets also depends on what stage you are at in building your wealth feast. When you are in the building stage you want to focus on getting growth and accelerating your freedom, so you want to pay loads of tax. Rather have the growth staying in your assets pot and have compounding working on it.

And if you are investing in high income yielding assets then it is important you know that and invest in income generating assets in the most tax efficient environment and way. Remember too, you MUST reinvest your investment income! That means reinvesting your dividends and rent from investment property back into your asset pot to create, buy and/or generate another asset that can grow in value for you. Many people start consuming the income off their assets too soon and this is fatal.

There you have it – growth vs income!!

In the comments below I’d love to know:

What distinctions has this video taught you and how will you view your investing going forward as a result?

Until now, have you been focusing on income believing that is what you wanted?

Are you minimizing your tax by using all the (legal) tax minimizing hacks you have available to you?

So as always, get out there, live that juicy life, let your assets do the hard work, and embrace being a great leader to your money so it can support you rather than enslave you.